Year after year, the Spanish fast fashion company reports strong
earnings.

And in the nine months ending in October, Zara's parent
company Inditex's net profits increased by 20%,Reutersreported.

Analysts expect Inditex to continue to grow.

"We believe that Inditex has the best business model in
apparel and expect Inditex to deliver double-digit earnings
growth per year over the next five years," Bernstein analysts
wrote, according to The Wall Street Journal.

A photo posted by ZARA Official (@zara) on Dec 2, 2015 at 12:16am PST on
Dec 2, 2015 at 12:16am PST

And it's paying off.

Inditex's founder, Amancio Ortega, is benefiting from his
company's wild success: this summer,
he surpassed Warren Buffet to
becomethe second richest man in the world.
(He was the richest man in the world for a few minutes in
October, Forbes reported.)

"If I had to condense the foundations for Zara's success, I
would say it comes down to agility and flexibility," Neil
Saunders, CEO of retail consulting firm Conlumino, said in an
e-mail to Business Insider. "From these things flow a number of
advantages: quickly picking up on new fashion trends, accurate
forecasting of stock requirements which reduces markdowns, quick
turn of stock which keeps customers coming back for new product,
good responsiveness to external factors like the weather, and
margin maximization."

"That they are agile and flexible really comes down to
their business model," he wrote, adding that "Zara uses a push
based model which means factories push out product to stores
which is then sold to consumers; there is no customization or
products being made to order. However, while the model is still
the same on the surface behind the scenes it is highly integrated
— much more so than many other apparel retailers."

"This integration means that there is a very tight supply chain
from initial design through to final production," Saunders added,
citing two major benefits. "It keeps lead times
shorter, which leads to the second advantage: that they
do not have to commit to all of their stock well
in advance of each season and, actually, are
still manufacturing during the season. Obviously this
means they can do things like respond to fashion changes, reduce
or increase production as necessary, introduce
new lines and so forth."

A photo posted by ZARA Official (@zara) on Nov 24, 2015 at 12:34am PST on
Nov 24, 2015 at 12:34am PST

Now, more so than ever, it's crucial to adapt rapidly. In fact,
there's a price to pay if you don't: looking at struggling
apparel retailers — such as Gap, Banana Republic, and J. Crew – it's clear that their failures to
adapt rapidly have lead to relying on sales to rid
themselves of their inventory. (Old Navy, however, has been singled out for a
quicker supply chain than its sister brand, Gap.)

However, Zara's business model has positioned the retailer
to avoid such a fate.

"This is a significant point of difference to most other apparel
retailers which usually commit in advance of each season and have
no capability to change volume or introduce new styles
mid-season," Saunders wrote. "Zara has always been this way, but
in today's market where trends change rapidly and where the
weather seems to fluctuate more, this has become a major source
of competitive advantage."

Saunders' comment regarding the weather rings particularly true;
on a recent conference call with analysts, Gap Inc. CEO addressed
that one of the problems plaguing Banana Republic was an
unseasonably warm fall.

And Zara's business model — arguably — is one that could
potentially withstand warm falls.